The Ministry of National Economy and Finance is moving ahead with a “tax ban” on the use of cash for rent payments and the mandatory settlement of rents exclusively through banking channels from October 1, with no further extension expected.
Following the six-month “grace period” granted in the spring, the economic authorities appear determined to adhere to the implementation timetable of the law, stressing that the necessary infrastructure of the Independent Authority for Public Revenue (AADE) and the banking sector is now fully operational to support the new system.
Therefore, property owners and tenants must now be prepared to complete all necessary arrangements and adjustments by September 30 at the latest, so that the payment of the agreed rent will henceforth be made through banking methods, with cash payments no longer being used or involved in any form.
No More Money “Hand to Hand”
Under the new procedure, all rents for residential and commercial properties must be paid exclusively through a bank account. Every rent payment—whether it concerns a primary residence, student accommodation, or commercial property—must be settled through a bank account (such as via money transfer, standing order, or e-banking), and not “hand to hand.”
Otherwise, cash payments will no longer be recognised for tax purposes. The bank transaction will become the only proof of rent payment.
Such a development will mean:
- Tenants who choose to pay “in cash” will be excluded from housing benefits and the annual rent support payment (up to €800, plus additional amounts for dependent children).
- For property owners, receiving rent in cash will result in the loss of the automatic 5% deduction on gross rental income, which is currently granted without requiring the submission of supporting documents.
- For businesses, commercial rents that are not paid through banks will not be recognised as deductible expenses against the company’s gross revenue.
Goal: Tackling “Black Money”
The reform aims to reduce tax evasion and create a more accurate picture of the real estate market. Currently, the average declared monthly rent stands at €230–240, an amount that, according to tax administration estimates, falls significantly below actual market levels, especially in urban centres.
Through the automatic cross-checking of bank transactions with electronic lease agreements and tax declarations, the ministry aims to eliminate cases of undeclared or underreported income.
It is noted that, based on the latest tax declarations, approximately 1.8 million taxpayers report income from rents. However, the overwhelming majority of property owners—nine out of ten, or 87%—declare annual income below €10,000, meaning less than €850 per month.
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